WEST PALM BEACH, Fla. — Several big companies have announced Chapter 11 bankruptcy filings in recent months and legal and business experts are breaking down what's contributing to the spike in filings.
According to Bloomberg, restaurant chain Red Lobster may soon be restructuring through Chapter 11 bankruptcy. The news came out last week.
This week, retailer Express announced on its website the company has filed for Chapter 11.
Tijuana Flats, a Tex-Mex chain, made a similar announcement. They're closing 10 of their Florida restaurants, including the Boynton Beach location.
"Interest rates have ticked up. So now you've got people who might have had systemic business problems, but the pandemic sort of hit the pause button," Adam Marshall, an attorney with Lorium Law, said. "And now, even though interest rates, if you look over 30 years, are also still at historic lows, they're relatively very high based on what we got used to a couple years ago, and that makes the cost of money more expensive, which impacts a lot of businesses."
Carl Gould, a business analyst and founder of 7 Stage Advisors, agreed and said he thinks this trend will likely continue as businesses struggle to cover their debt service.
"If you're a company where you needed to borrow money for your operations, you borrowed money at a certain rate, now inflation and things are more and more expensive," Gould said. "...As long as we're gonna see the volatility of inflation and interest rates, you're going to see bankruptcies. ...It's that ripple effect."